By Sebastian Hellmann, cbs Corporate Business Solutions
CFOs today expect more of their IT departments: closer alignment with the business strategy, greater management expertise, and greater agility. The trend toward digital finance represents an opportunity for enterprises to analyze their established structures and transfer them into a harmonized S/4HANA One Finance target structure.
Here is a good example from one of my existing customers: A mechanical engineering company from northern Germany wants to harmonize the 13 chart of accounts and 13 controlling areas for its 34 national subsidiaries. Its posting processes have to be globally standardized and universal standard reporting must be set up.
This is a typical starting point for many European industrial companies that operate on international markets. In dialogue with the customer, I now have to try to bridge the gap between long-outdated control concepts based on old, heterogeneous system landscapes, and the many possibilities of the new SAP world. What the customer wants is clear: a globally standard finance & reporting platform.
At the beginning, everyone always has the same question: Where will the journey take us? In reality, everyone shares the same ‘target picture’ of becoming a harmonized enterprise, but they do not know what this should look like in concrete terms or how to achieve it. What control instruments are required? Should we use the cost of sales method or the total cost procedure? What about reporting and month-end closing? How can we implement a future governance structure that ensures sustainability? These questions need to be resolved in order to derive a One Finance target picture.
S/4HANA Finance Has the Required Maturity
At the same time, we have to be thinking about moving to S/4! The advantages of S/4HANA have long since been talked about and it now has the maturity. S/4 Finance runs seamlessly with very few changes now being made to its core structure. Many functions are new for the customer, although they had been delivered may years previously with the New G/L. One advantage is faster month-end closing – courtesy of improved system performance and increasing automation. In addition, leading indicators give warnings: for example, rising purchase costs for aluminum in the U.S., falling revenues in Russia due to currency effects! This means that the leadership team consisting of CEO and CFO receive more and better quality data allowing them to manage the company more proactively and more accurately. Note, however, that this added value is not an automatic consequence of implementing S/4! Before taking that step, it is vital to harmonize processes and create global transparency.
For the new concept, everything has to be mapped in the master data: accounts, cost centers, profit centers, and materials. All details of the new One Finance approach are broken down by the management and brought into the business departments. We compare our ‘target picture’ with the status quo and then prepare a transformation plan using our special software cbs ET Enterprise Transformer. Note that a number of different projects can be combined in the one approach. For example, you can complete a chart of accounts and controlling area transformation at the same time as implementing the New G/L or new S/4HANA Universal Journal.
Process Management is the Responsibility of the Business Department
The One Finance approach must be a corporate goal, as governance structures can only be changed with support from above! Mapping old structures to new ones is a major challenge. This is not a one-time task, but something that companies have to do over and over on a rolling basis. And it is fundamentally important to leverage the knowledge of the business department. Process management must be the responsibility of the business department and not the IT team.
Another element that should not be underestimated is change management. It helps here to keep highlighting the added value: globally standardized processes in finance & accounting, a higher degree of automation, real-time analyses at every level of detail and information, greater efficiency, lower costs. Ultimately, the move to S/4 is also about safeguarding a business’s capacity to innovate. Can I optimally leverage new technologies and functions? Can I respond to future changes with sufficient speed and agility? To ensure that the accounting system becomes just as modern and efficient as the customer’s world-class products.